Medical Residents:

Options Exist to Make Student Loan Payments Manageable

HRD-92-21: Published: Nov 26, 1991. Publicly Released: Nov 26, 1991.

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Linda G. Morra
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Pursuant to a congressional request, GAO evaluated medical residents' ability to repay their educational debts.

GAO found that: (1) medical residents who are required to make principal or interest payments on their Stafford loans could incur financial hardship; (2) without forbearance, third- and fifth-year residents would spend about 17 and 18 percent, respectively, of gross income to repay their student loans, exceeding the Department of Education's 10-percent level for manageable nonhousing debt; (3) while partial forbearance mitigates medical residents' debt burden, it may not shield them from financial hardship; (4) third- and fifth-year residents who obtain complete forbearance would incur debt burdens of 4 and 7 percent of gross income, respectively, which are comparable with nonmedical borrowers' debt burdens; (5) although legislation to restrict the medical residency deferment to 2 years provides residents with access to forbearance, neither the legislation nor Education regulations require complete forbearance; and (6) if physicians need further debt relief after residency, they can lower their debt burdens by extending repayment schedules through loan consolidation or graduated repayment plans.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 428(b)(1)(V) of the Higher Education Act of 1965 was amended effective October 1, 1992, Public Law No. 102-325, to require lenders to offer complete forbearance to all borrowers, including medical residents.

    Matter: Congress may wish to consider amending the Higher Education Act of 1965 to require that lenders grant medical residents' requests for complete forbearance of Stafford loan principal and interest payments. If enacted, medical residents would immediately have the option of obtaining complete forbearance.


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